2023: A Year In Review

1/12/2024 - By Chris Stennett, CFP

As investors rang in the New Year of 2023, there was a lot to be apprehensive about. Inflation was still high as the Fed was aggressively raising rates, leading to a historically bad year for combined stock and bond investors. Though 2022 had ended with a late-year rally, almost every economist gave some probability that the US was headed for a recession in 2023. It seems the markets did not get the memo. The S&P 500 (large companies) finished up 24%, The Russell 2000 (small companies) was up 15%, and the Nasdaq 100 (technology companies) finished up 43% on the year. Leading the charge were 7 household names affectionately known as…

The Magnificent Seven

Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla finished up a combined 111% on the year; thus, they were dubbed “the Magnificent Seven.” These seven companies lead in performance and now represent 30% of the total S&P 500. International stocks also saw a strong year. The MSCI EAFE (International Developed) finished up almost 19% while the MSCI Emerging Markets Index grew by over 10%.

US Bond Markets and the 60/40

The US bond market had a very interesting year in 2023. For starters, yields on 2-year treasuries exceeded yields on 10-year treasuries throughout the year, causing an “inverted” yield curve. Investors saw yields fluctuate widely through the year but finish essentially where they started. Meanwhile, The Fed continued to raise interest rates through July’s FOMC meeting, as inflation cooled. Both factors were forecast to create significant challenges for investors already reeling from the poor performance of 2022.

SVB and SBF

While much of what investors experienced in 2023 was positive, there were some concerning events that deserve mention. In March, investor concerns over a bank run began to set in. Silicon Valley Bank was the most notable institution to be impacted, as regulators stepped in to remove management and control deposit outflows. In November, Sam Bankman-Fried, CEO of FTX and co-founder of Alameda Research, was convicted for stealing billions from investors in one of the biggest financial frauds in American history.

Stay Disciplined

One of the biggest takeaways from 2023 is the importance of thinking long-term. At Saltmarsh, investment decisions aren’t driven by predictions about where the market will go. Instead, we build portfolios tailored to each client’s tolerance for investment risk and time-centered needs. We work with our clients to explain the impact current events have on their portfolios and help them make sound financial decisions. In 2022, we thanked our clients for staying the course in the face of turbulent markets. In 2023, many of our clients thanked us for helping them stay committed to the investment strategy.

About The Author | Chris Stennett, CFP®

Chris is a senior financial advisor and Certified Financial Planner® practitioner for Saltmarsh Financial Advisors, LLC, an affiliate of Saltmarsh, Cleaveland & Gund. He serves individuals and organizations as a comprehensive financial planner and coordinator of investment activities. His areas of expertise include investment management, income planning, tax and estate planning and risk management. Chris has over 15 years experience as a wealth manager working with high-net-worth families and privately held business owners across the U.S.

In addition to his role as advisor, Chris is an accomplished presenter known for being able to convey highly technical concepts to every investor. Chris was recently invited to speak at the Tennessee Banker's Association Trust and Wealth Management Conference in Nashville, TN where he presented on the SECURE Act 2.0.

When he's not with his clients, or presenting, Chris spends his time with his wife and 2 daughters traveling and going to the beach.